The value of the TrueUSD (TUSD) stablecoin rose to $1.20 a few days ago on Binance. The SUI farming pool on Binance is the likely reason behind the 20% price hike.
The TrueUSD (TUSD) stablecoin has been canceled on several exchanges, including Binance. Unusually, the token has priced more than $1.20 in relation to USDT on the exchange. Binance is one of the most popular exchanges for TrueUSD, with the trading platform promoting it as a no-fee pair.
Aave and cGMP caused in Depeg
The nearly 20% increase in price could be caused by high demand for the token, with liquidity unable to keep up. Kaiko reported on the development, saying, “TUSD liquidity has not kept pace with volumes, which makes a decoupling like this more likely.”
Kaiko also noted that users on Aave and Compound started borrowing large amounts of the token as the decoupling began. Regarding the trading strategy used, Kaiko advertiser:
Most of these transactions appear to be organic rather than bot-driven. The most common strategy has been to borrow TUSD and swap for USDC, effectively selling TUSD from its high price. However, neither Aave nor Compound has a large supply of TUSD, which means The borrowing rates have skyrocketed, reaching over 100% APR on both protocols.”
What is TrueUSD (TUSD)?
TrustUSD (TUSD) is an ERC-20 stablecoin pegged to the US dollar. The market cap has soared, becoming the fifth largest stablecoin, according to DeFiLlama. It currently has a market capitalization of $2.5 billion, with a 20% increase in market capitalization over the past week.
The increase could be caused by the SUI farming pool on Binance. Sui is a layer 1 blockchain network, and users can share BNB and TUSD for token farming.
There was also some controversy after TRON founder Justin Sun sent $50 million in TUSD to Binance. The speculation was that Sun was trying to implant SUI liquidity pools on Binance. Changpeng Zhao tweeted that Binance will take action against any agricultural action taken. Reverse Sun conversion.
Weakening of the stablecoin supply
The stablecoin market has had an eventful 2023, although the last days have not been entirely optimistic. The total supply of the top 5 stablecoins is down about 23% this year, according to data from Glassnode.
Tether (USDT) continues to dominate the stablecoin market, with its market share rising to the highest level in 15 months in March. Other stablecoins have been hit hard, such as USDC, which saw outflows in the billions a few months ago. It remains the second largest stablecoin with a value of $30 billion, behind Tether’s $82 billion.
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